<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------------------------
AMENDMENT NO. 1
TO
SCHEDULE 13D
(RULE 13d-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
ELECTROPURE, INC.
(Name of Issuer)
Common Stock, $0.01 par value per share
(Title of Class of Securities)
286133
(CUSIP Number)
Catherine Patterson
Electropure, Inc.
23251 Vista Grande, Suite A
Laguna Hills, CA 92653
(714) 770-9347
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 2, 1997
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1 (b) (3) or (4), check the following
box [ ].
(Continued on following pages)
(Page 1 of 9 pages)
The information required in the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE> 2
13D
CUSIP NO. 286133 PAGE 2 OF 9 PAGES
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
ANTHONY M. FRANK
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS
PF
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OR ORGANIZATION
CALIFORNIA, USA
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,797,124
----------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY NONE
OWNED BY ----------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 1,797,124
WITH ----------------------------------------------------
10 SHARED DISPOSITIVE POWER
NONE
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,797,124
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
41.8% OF THE COMMON STOCK
36.2% OF VOTING POWER
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN - 1,717,124
EP - 80,000
- -------------------------------------------------------------------------------
* SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
PAGE 3 OF 9 PAGES
This Amendment No. 1 amends, in relevant part as follows, the Schedule
13D, filed December 18, 1992, of Anthony M. Frank (the "Reporting Person") with
respect to the common stock, $0.01 par value per share ("Common Stock") of
Electropure, Inc., a California corporation, formerly HOH Water Technology
Corporation.
On July 25, 1996, the issuer changed its corporate name to
"Electropure, Inc." and effected a one-for-ten reverse stock split. FOR PURPOSES
OF THIS REPORT, ALL ISSUANCES OF COMMON STOCK AND WARRANTS TO PURCHASE COMMON
STOCK ARE REFLECTED IN POST-REVERSE SPLIT AMOUNTS.
ITEM 1. SECURITY AND ISSUER
Common Stock, $0.01 par value, of Electropure, Inc., a California
corporation ("Electropure"). Electropure's principal executive office is located
at 23251 Vista Grande, Suite A, Laguna Hills, California 92653.
ITEM 2. IDENTITY AND BACKGROUND
(a) Anthony M. Frank
(b) 320 Meadowood Court, Pleasant Hill, CA 94523
(c) Retired - former Postmaster General
(d) Not applicable
(e) Not applicable
(f) U.S.A.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Of the $1,022,619 used to acquire shares of Common Stock of
Electropure, $295,000 was originally loaned to the Company in 1991 and exchanged
for equity in December, 1992. An additional $95,000 was loaned to the Company's
licensee, EDI Components ("EDI"), and under an agreement with the Company,
interest accrued thereon was waived and the principal loan amount (plus $5,000
in added value) was exchanged for equity in February, 1996. A 1996 loan to EDI
in the sum of $500,000, plus $38,056 in accrued interest, was also exchanged for
the Company's equity in June, 1997. Additionally, a $50,000 investment in the
Company's licensee, EDI, resulted in the acquisition by Mr. Frank of 20,000
Warrants to purchase Common Stock. See Item 5. - "Interest in Securities of
Issuer." All of the funds utilized to purchase shares of Common Stock from
Electropure, including amounts previously loaned to Electropure and EDI or
invested in EDI, were from Mr. Frank's personal funds.
<PAGE> 4
PAGE 4 OF 9 PAGES
ITEM 4. PURPOSE OF THE TRANSACTION
Mr. Frank purchased certain of the securities of Electropure pursuant
to private placement offerings, as a private investor at the request of
Electropure, to help fund working capital requirements of the issuer.
Electropure is currently negotiating with its licensee, EDI Components,
to terminate a July, 1992 license agreement granting EDI exclusive manufacturing
and marketing rights to the Company's patented water purification technology. It
is anticipated that Electropure will pay EDI up to $2,950,000 to terminate the
license relationship in some combination of cash and equity over a period of
time. It is also anticipated that Electropure will hire the management and staff
of EDI; will grant EDI the right to appoint a Director(s) to the Company's
Board; will seek to obtain sufficient working capital through a private and/or
public sale of its securities; and that manufacturing and marketing of the water
purification technology will then be conducted by Electropure.
Mr. Frank may in the future acquire, hold and dispose of shares of
Common Stock or warrants or options for such Common Stock or other securities of
Electropure and such transactions may be in the open market, privately or
directly from Electropure.
Except as set forth above, Mr. Frank does not have any plans or
proposals which may have, which related to or which would result in:
(a) The acquisition by any person of additional securities of
Electropure, or the disposition of securities of Electropure;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving Electropure or any of its
subsidiaries;
(c) A sale or transfer of a material amount of assets of Electropure or
any of its subsidiaries;
(d) Any change in the present Board of Directors or management of
Electropure, including any plans or proposals to change the number
or term of directors or to fill any existing vacancies on the
Board;
(e) Any material change in the present capitalization or dividend
policy of Electropure;
(f) Any other material change in Electropure's business or corporate
structure;
(g) Changes in Electropure's charter, bylaws or instruments,
correspondence thereto or other actions which may impede the
acquisition or control of Electropure by any person;
<PAGE> 5
(h) Causing a class of securities of Electropure to be delisted from a
national securities exchange or to cease to be quoted in an
inter-dealer quotation system of a registered national securities
association;
(i) A class of equity securities of Electropure becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934; or
(j) Any action similar to any of those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF ISSUER
(a) Mr. Frank owns the following shares of Electropure:
1,797,124 shares of Common Stock with one vote per share(1).
Mr. Frank owns beneficially 36.2% of the Common Stock; 41.8% if
all of the warrants described in Item 6 are exercised. Mr. Frank
owns 23.8% of the voting power of all classes of stock of
Electropure.
(b) Mr. Frank has the sole voting and dispositive power over the shares
he owns.
(c) Since December 5, 1989, Mr. Frank has entered into the following
transactions with regard to Electropure's Common Stock:
Between December 5, 1989 and October 10, 1990, Mr. Frank acquired
26,668 shares of Common Stock from the issuer in private placement
offerings at $7.50 per share. As additional consideration, Mr.
Frank received 8,890 warrants to purchase Common Stock at $15.00
per share. In or around September, 1990, Mr. Frank gifted a total
of 6,668 of such shares and 2,224 Warrants, in equal amounts, to
his adult children, Randall P. Frank and Tracy F. Frank.
In May, 1992, Mr. Frank acquired 20,000 Warrants to purchase Common
Stock of Electropure at $0.50 per share as a result of his
investment of $50,000 in EDI Components, a privately-held
California corporation. The Company entered into various agreements
in July, 1992 granting EDI the exclusive manufacturing and
marketing rights to the Company's patented water treatment
technology. In exchange for cash consideration, certain royalty
rights and the right to terminate the license, the Company granted
EDI's investors warrants to purchase Common Stock equal to four (4)
times such investors' capital investment in EDI. On October 24,
1994, Mr. Frank exercised such Warrants and received 20,000 shares
of Common Stock.
- ------------------
(1) Includes warrants for 300,000 shares of Common Stock exercisable at $2.25
per share; 50,000 shares exercisable at $1.25 per share; and 4,000 shares
exercisable at $0.50 per share.
<PAGE> 6
PAGE 6 OF 9 PAGES
Between March 3, 1991 and July 25, 1991, Mr. Frank loaned the
Company $115,000. In November, 1991, Mr. Frank loaned the Company
an additional $200,000 and received, as partial consideration, the
right to purchase, for $0.10 each, 80,000 ten-year Warrants at
$1.25 per share. On December 17, 1992, Mr. Frank exercised the
right to purchase such Warrants and on the same date, gifted 30,000
of such Warrants, in equal amounts of 10,000, to his two adult
children and Mr. Floyd Panning, President of EDI Components. The
right to exercise the balance of such Warrants (50,000) has been
retained by Mr. Frank.
On December 18, 1992, Mr. Frank converted an aggregate of $315,000
in outstanding loans to the Company (as disclosed above), into
126,000 shares of Common Stock and 39,375 one-year Warrants to
purchase Common Stock at $9.00 per share. Concurently therewith,
Mr. Frank gifted 8,000 and 2,500 of such shares and warrants,
respectively, to his adult children in equal amounts. On January 4,
1994, pursuant to a private offering conducted by the issuer, Mr.
Frank received 36,875 shares of Common Stock upon the exercise of
all of such Warrants at a reduced price of $1.50 per share.
Also on January 4, 1994, Mr. Frank exercised 6,666 Warrants
originally issued in 1990 and 1991 at $15.00, at a reduced exercise
price of $1.50 per share.
Between June, 1993 and March, 1995, Mr. Frank loaned the Company's
licensee, EDI Components, an aggregate of $95,000. Pursuant to the
July, 1992 license arrangements between the Company and its
licensee, Electropure issued to Mr. Frank a total of 16,500
Warrants to purchase Common Stock at $0.50 per share, plus the
right to convert the principal amount of such loans (and $5,000 in
added value), to Common Stock at discounts of 25% and 50% of the
fair market value of such Common Stock on the date of conversion.
On February 22, 1996, Mr. Frank agreed to waive all interest
accrued on such loans and elected to convert the $95,000 principal,
plus $5,000 added value, to 116,667 and 33,333 shares of Common
Stock at $0.60 and $0.90 per share, respectively.
On February 15, 1995, Mr. Frank exercised 12,500 of the 16,500
Warrants described in the preceding paragraph at $0.50 per share.
On February 23, 1996, the Company and its licensee, entered into a
Convertible Loan agreement with Mr. Frank, whereby EDI Components
was loaned the sum of $500,000 for a period of two years at 10%
interest. As additional consideration for the loan, the Company
granted Mr. Frank a first security interest in all of the Company's
patents and future patents during the term that the loan remained
outstanding. As additional consideration, the Company granted Mr.
Frank 300,000 five-year warrants to purchase Common Stock at $2.25
per share. On June 2, 1997, Mr. Frank converted the principal
amount of the loan, plus $38,055 in accrued interest, into
1,717,484 shares of the Company's Common Stock at approximately
$0.31 per share. On June 3, 1997, Mr. Frank sold, at his cost,
<PAGE> 7
PAGE 7 OF 9 PAGES
638,404 of such shares to his adult son, Randall P. Frank (319,202
shares), and to Floyd Panning (319,202 shares), President of EDI
Components.
The following Warrants are currently exercisable by Mr. Frank:
<TABLE>
<CAPTION>
------------------- ------------------- -----------------
DATE GRANTED PURCHASE PRICE NO. OF SHARES
------------------- ------------------- -----------------
<S> <C> <C>
12/17/92 $ 1.25 50,000
03/27/95 $ .50 4,000
02/22/96 $ 2.25 300,000
</TABLE>
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SECURITIES OF THE ISSUER
Pursuant to the transactions described in Item 5 above, Mr. Frank has
the right, until December 17, 2002 to purchase 50,000 shares of Electropure's
Common Stock at $1.25 per share. Additionally, Mr. Frank has the right, until
February 22, 2001 to purchase 300,000 shares of Common Stock at $2.25 per share.
Finally, Mr. Frank currently holds the right to purchase, at $0.50 each, 4,000
shares of Common Stock until January 31, 1998 or until the Company terminates
its license relationship with EDI Components, whichever occurs first.
In addition to the 20,000 Warrants described in Item 5 above, as
partial consideration for his $50,000 investment in EDI Components in May, 1992,
Mr. Frank received the following rights under the license agreement between
Electropure and EDI:
(a) A Stock Right Agreement providing the right to purchase, in an
amount equal to his investment in EDI, additional shares of
Electropure Common Stock at a 25% discount from the cash
purchase price at which the Company may, in the future, offer
such stock to bona fide third party purchasers;
(b) A Security interest in the Company's patented water
purification technology equal to Mr. Frank's $50,000
investment; and
(c) The right to payment by Electropure in the sum of $200,000
upon the termination of the license relationship with EDI. It
is anticipated that the Company will negotiate an arrangement
with Mr. Frank, and with the other investors of EDI
Components, to satisfy such payment in some combination of
cash and/or securities of the Company.
Between December, 1996 and April, 1997, Mr. Frank loaned EDI Components an
additional $150,000 at 10% interest. Mr. Frank has the right to convert said
loans into common stock of EDI Components and, upon such conversion, receive
53,775 Warrants to purchase the Common Stock of Electropure at $0.50 per share.
If such loans were converted, Mr. Frank would also be entitled to a payment from
Electropure in the additional sum of $200,000 upon termination of the license
relationship with EDI, although the parties may negotiate to modify the terms of
repayment to provide Mr. Frank with the right to convert such loans into Common
Stock of the Company.
<PAGE> 8
PAGE 8 OF 9 PAGES
ITEM 7. EXHIBITS
10.10.A Subscription Agreement, December 6, 1989 *
10.10.B Subscription Agreement, October 10, 1990 *
10.10.C Subscription Agreement, March 1, 1991 *
10.10.D Warrants for 4,444 shares (Warrant No. 219 - 11/17/89) **
10.10.E Warrants for 2,222 shares (Warrant No. 278 - 10/18/90) **
10.10.F Warrants for 6,250 shares (Warrant No. 299 - 03/27/91) **
10.10.G Warrants for 2,500 shares (Warrant No. 324 - 08/06/92) **
10.10.H Warrants for 3,125 shares (Warrant No. 332 - 08/06/92) **
10.10.I Warrants for 25,000 shares (Warrant No. 361 - 12/18/92) **
10.10.J Warrants for 50,000 shares (Warrant No. 360 - 12/17/92) **
10.10.K Warrants for 20,000 shares (Warrant No. E-1003 - 07/29/92) **
10.10.L Warrants for 2,500 shares (Warrant No. E-1024 - 06/24/93) ***
10.10.M Warrants for 5,000 shares (Warrant No. E-1029 - 05/25/94) - face
sheet only ***
10.10.N Warrants for 5,000 shares (Warrant No. E-1030 - 06/17/94) - face
sheet only ***
10.10.O Warrants for 4,000 shares (Warrant No. E-1034 - 03/27/95) - face
sheet only***
10.10.P Warrants for 300,000 shares (Warrant No. 388 - 02/22/96) - face
sheet only
10.10.Q Stock Right Agreement No. E-1034
10.10.R 10% Two-Year Convertible Term Note - 12/31/96
10.10.S 10% Two-Year Convertible Term Note - 02/25/97 - face sheet only
10.10.T 10% Two-Year Convertible Term Note - 04/10/97 - face sheet only
- -----------------
* Previously filed in connection with Schedule 13D filed on December 18,
1992 by the Reporting Person.
** Previously filed in connection with Schedule 13D filed on December 18,
1992 by the Reporting Person. The number of Warrants reflected have been
modified to give effect to the one-for-ten reverse stock split conducted
by the Company in July, 1996.
*** The number of Warrants reflected have been modified to give effect to
the one-for-ten reverse stock split conducted by the Company in July,
1996.
<PAGE> 9
PAGE 9 OF 9 PAGES
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Amendment No. 1 to Schedule 13D
is true, complete and correct.
Dated: June 30, 1997
/s/ ANTHONY M. FRANK
-------------------------------
Anthony M. Frank
<PAGE> 10
AMENDMENT NO. 1
TO
SCHEDULE 13D
ANTHONY M. FRANK
(Name of Reporting Person)
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
PAGE
SEQUENTIALLY
NUMBERED
------------
<S> <C>
10.10.L Warrants for 2,500 shares (Warrant No. E-1024 - 06/24/93)
10.10.M Warrants for 5,000 shares (Warrant No. E-1029 - 05/25/94)
10.10.N Warrants for 5,000 shares (Warrant No. E-1030 - 06/17/94)
10.10.O Warrants for 4,000 shares (Warrant No. E-1034 - 03/27/95)
10.10.P Warrants for 300,000 shares (Warrant No. 388 - 02/22/96)
10.10.Q Stock Right Agreement No. E-1034
10.10.R 10% Two-Year Convertible Term Note - 12/31/96
10.10.S 10% Two-Year Convertible Term Note - 02/25/97
10.10.T 10% Two-Year Convertible Term Note - 04/10/97
</TABLE>
<PAGE> 1
EXHIBIT (L); PAGE 1
WARRANT NO. E-1024
THIS WARRANT, AND THE COMMON STOCK ISSUABLE UPON ITS EXERCISE, HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN
WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THAT ACT COVERING THIS WARRANT AND/OR THE COMMON STOCK ISSUABLE UPON ITS
EXERCISE, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO HOH WATER
TECHNOLOGY CORPORATION THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
---------------------------------
WARRANT TO PURCHASE COMMON STOCK
OF
HOH WATER TECHNOLOGY CORPORATION
---------------------------------
This is to Certify that, FOR VALUE RECEIVED, ANTHONY M. FRANK, or
assigns, ("Holder"), is entitled to purchase, subject to the provisions of this
Warrant, from HOH WATER TECHNOLOGY CORPORATION, a California corporation
("Company"), Twenty Five Thousand (25,000) fully paid, validly issued and
nonassessable shares of Common Stock, $0.01 par value, of the Company ("Common
Stock") at any time or from time to time during the period from the date hereof
until the first to occur to (i) the exercise by HOH of Right provided in and
defined in Section 3(b) of that certain Master Agreement between HOH and
Electropure, Inc., a California corporation, dated July 29, 1992, or (ii) 5:00
P.M. Los Angeles City Time on January 31, 1998 (the "Exercise Period") at an
initial exercise price equal to $0.05 per share. The number of shares of Common
Stock to be received upon the exercise of this Warrant and the price to be paid
for each share of Common Stock may be adjusted from time to time as hereinafter
set forth. The shares of Common Stock deliverable upon such exercise, and as
adjusted from time to time are hereinafter sometimes referred to as "Warrant
Shares" and the exercise price of a share of Common Stock in effect at any time
and as adjusted from time to time is hereinafter sometimes referred to as the
"Exercise Price."
(A) EXERCISE OF WARRANT. This Warrant may be exercised in whole or in
part at any time during the Exercise Period, and during the Exercise Period the
Holder shall have the right to exercise this Warrant into the kind and amount of
shares of stock and other securities and property (including cash) receivable by
a holder of the number of shares of Common Stock into which this Warrant might
have been exercisable immediately prior thereto. This Warrant may be exercised
by presentation and surrender hereof to the Company at its principal office, or
at the office of its stock transfer agent, if any, with the Purchase Form
annexed hereto duly executed and accompanied by payment of the Exercise Price
for the number of Warrant Shares specified in such form. As soon as practicable
after each such exercise of the Warrants, but not later than seven (7) days from
the date of such exercise, the Company shall issue and deliver to the Holder a
certificate or certificates for the Warrant Shares issuable upon such
<PAGE> 2
(EXHIBIT (L); PAGE 2
exercise, registered in the name of the Holder or its designee. If this Warrant
should be exercised in part only, the Company shall, upon surrender of this
Warrant for cancellation, execute and deliver a new Warrant evidencing the
rights of the Holder thereof to purchase the balance of the Warrant Shares
purchasable thereunder. Upon receipt by the Company of this Warrant at its
office, or by the stock transfer agent of the Company at its office, in proper
form for exercise, the Holder shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise, notwithstanding that the
stock transfer books of the Company shall then be closed or that certificates
representing such shares of Common Stock shall not then be physically delivered
to the Holder.
(B) RESERVATION OF SHARES. The Company shall at all times reserve for
issuance and/or delivery upon exercise of this Warrant such number of shares of
its Common Stock as shall be required for issuance and delivery upon exercise of
the Warrants.
(C) FRACTIONAL SHARES. No fractional shares or script representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Holder an amount in cash equal to such fraction
multiplied by the current market value of a share, determined as follows:
(1) If the Common Stock is listed on a National Securities
Exchange or admitted to unlisted trading privileges on such exchange or listed
for trading on the NASDAQ system, the current market value shall be the last
reported sale price of the Common Stock on such exchange or system on the last
business day prior to the date of exercise of this Warrant or if no such sale is
made on such day, the average closing bid and asked prices for such day on such
exchange or system; or
(2) If the Common Stock is not so listed or admitted to
unlisted trading privileges, the current market value shall be the mean of the
last reported bid and asked prices reported by the National Quotation Bureau,
Inc. on the last business day prior to the date of the exercise of this Warrant;
or
(3) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so reported, the
current market value shall be an amount, not less than book value thereof as at
the end of the most recent fiscal year of the Company ending prior to the date
of the exercise of the Warrant, determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company or, if higher, $0.01 per
share.
(D) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other warrants of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of Common
Stock purchasable hereunder. Upon surrender of this Warrant to the Company at
its principal office or at the office of its stock transfer agent, if any, with
the Assignment Form annexed hereto duly executed and funds sufficient to pay any
transfer tax, the Company shall, without charge, execute and deliver a new
Warrant I the name of the assignee named in such instrument of assignment and
this Warrant shall promptly be canceled. This Warrant may be divided or combined
with other warrants which carry the same rights upon presentation hereof at the
principal office of the Company or at the office of its stock transfer agent, if
any, together with a written notice specifying the names and denominations in
which new Warrants are to
<PAGE> 3
EXHIBIT (L); PAGE 3
be issued and signed by the Holder hereof. The term "Warrant" as used herein
includes any Warrants into which this Warrant may be divided or exchanged. Upon
receipt of the Company of evidence satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Warrant, if mutilated, the Company will execute and deliver
a new Warrant of like tenor and date. Any such new Warrant executed and
delivered shall constitute an additional contractual obligation on the part of
the Company, whether or not this Warrant so lost, stolen, destroyed, or
mutilated shall be at any time enforceable by anyone.
(E) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at low or equity,
and the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth herein.
(F) ANTI-DILUTION PROVISIONS. The Exercise Price in effect at any time
and the number and kind of securities purchasable upon the exercise of the
Warrants shall be subject to adjustment from time to time upon the happening of
certain events as follows:
(1) In case the Company shall (i) declare a dividend or make a
contribution on its outstanding shares of Common Stock in shares of Common
Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock into
a greater number of shares, or (iii) combine or reclassify its outstanding
shares of Common Stock into a smaller number of shares, the Exercise Price in
effect at the time of the record date for such dividend or distribution or of
the effective date of such subdivisions, combination or reclassification shall
be adjusted so that it shall equal the price determined by multiplying the
Exercise Price by a fraction, the denominator of which shall be the number of
shares of Common Stock outstanding after giving effect to such action, and the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such action. Such adjustment shall be made successively
whenever any event listed above shall occur.
(2) Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to Subsection (1) above, the number of shares
purchasable upon exercise of this Warrant shall simultaneously be adjusted by
multiplying the number of shares initially issuable upon exercise of this
Warrant by the Exercise Price in effect on the date hereof and dividing the
product so obtained by the Exercise Price, as adjusted.
(3) Whenever the Exercise Price is adjusted, as herein
provided, the Company shall promptly cause a notice setting forth the adjusted
Exercise Price and adjusted number of shares issuable upon exercise of each
Warrant to be mailed to the Holders, at their last addresses appearing in the
Warrant Register, and shall cause a certified copy thereof to be mailed to its
transfer agent, if any. The Company may retain a firm of independent certificate
public accountants selected by the Board of Directors (who may be the regular
accountants employed by the Company) to make any computation required by this
Section F and a certificate signed by such firms shall be conclusive evidence of
the correctness of such adjustment.
<PAGE> 4
EXHIBIT (L); PAGE 4
(4) In the event that at any time, as a result of an
adjustment made pursuant to Subsection (1) above, the Holder of this Warrant
thereafter shall become entitled to receive any shares of the Company, other
than Common Stock, thereafter the number of such other shares so receivable upon
exercise of this Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Common Stock contained in Subsection (1) above.
(5) Irrespective of any adjustments in the Exercise Price or
the number or kind of shares purchasable upon exercise of this Warrant, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the similar Warrants initially
issuable pursuant to this Agreement.
(G) OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be adjusted
as required by the provisions of the foregoing Section, the Company shall
forthwith file in the custody of its Secretary or an Assistant Secretary at its
principal office and with its stock transfer agent, if any, an officer's
certificate showing the adjusted Exercise Price determined as herein provided,
setting forth in reasonable detail the facts requiring such adjustment,
including a statement of the number of additional shares of Common Stock, if
any, and such other facts as shall be necessary to show the reason for and the
manner of computing such adjustment. Each such officer's certificate shall be
made available at all reasonable times for inspection by the holder or any
holder of a Warrant executed and delivered pursuant to Section A and the Company
shall, forthwith after each such adjustment, mail a copy by certified mail of
such certificate to the Holder or any such holder.
(H) NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be
outstanding, (i) if the Company shall pay any dividend or make any distribution
upon the Common Stock or (ii) if the Company shall offer to the holders of
Common Stock for subscription or purchase by them any share of any class or any
other rights or (iii) if the capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then in any such case, the Company shall cause
to be mailed by certified mail to the Holder, at least fifteen days prior to the
date specified in (x) or (y) below, as the case may be, a notice containing a
brief description of the proposed action and stating the date on which (x) a
record is to be taken for the purpose of such dividend, distribution or rights,
or (y) such reclassification, reorganization, consolidation, merger, conveyance,
lease, dissolution, liquidation or winding up is to take place and the date, if
any is to be fixed, as of which the holders of Common Stock or other securities
shall receive cash or other property deliverable upon such reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation or
winding up.
(I) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company, or in case of any consolidation or merger of the
Company with or into another corporation (other than a merger with a subsidiary
in which merger the Company is the continuing corporation and which does not
result in any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the class issuable upon exercise of this
Warrant) or in case of any sale, lease or conveyance to another
<PAGE> 5
EXHIBIT (L); PAGE 5
corporation of the property of the Company as an entirety, the Company shall, as
a condition precedent to such transaction, cause effective provisions to be made
so that the Holder shall have the right thereafter by exercising this Warrant at
any time prior to the expiration of the Warrant, to purchase the kind and amount
of shares of stock and other securities and property receivable upon such
reclassification, capital reorganization and other change, consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
which might have been purchased upon exercise of this Warrant immediately prior
to such reclassification, change, consolidation, merger, sale or conveyance. Any
such provision shall include provision for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Warrant. The foregoing provisions of this Section I shall similarly apply to
successive reclassifications, capital reorganizations and changes of shares of
Common Stock and to successive consolidations, mergers, sales or conveyances. In
the event that in connection with any such capital reorganization or
reclassification, consolidation, merger, sale or conveyance, additional shares
of Common Stock shall be issued in exchange, conversion, substitution or
payment, in whole or in part, for a security of the Company other than Common
Stock, any such issue shall be treated as an issue of Common Stock covered by
the provisions of Subsection (1) of Section F hereof.
IN WITNESS THEREOF, the Company has caused this Warrant to be signed and
attested by the Undersigned, being duly authorized, as of the date set forth on
the first part hereof.
HOH WATER TECHNOLOGY CORPORATION
By /s/ CATHERINE PATTERSON
-----------------------------
Catherine Patterson
Corporate Secretary
<PAGE> 6
EXHIBIT (L); PAGE 6
PURCHASE FORM NO. E-1024
Dated:____________________, 19___
The undersigned hereby irrevocably elects to exercise the within Warrant to the
extent of purchasing _________________ shares of Common Stock and hereby makes
payment of $____________________ in payment of the actual exercise price
thereof.
=====================================================================
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name ___________________________________________________________________________
(Please typewrite or print in block letters)
Address ________________________________________________________________________
___________________________
Signature of Warrant Holder
<PAGE> 7
EXHIBIT (L); PAGE 7
ASSIGNMENT FORM NO. E-1024
FOR VALUE RECEIVED, ______________________________________________________ (the
"Warrant Holder") hereby sells, assigns and transfers unto:
Name ________________________________________________________
(Please typewrite or print in block letters)
Address _________________________________________________________
the right to purchase Common Stock represented by this Warrant to the extent
of ____________ shares as to which such right is exercisable and does hereby
irrevocably constitute and appoint ________________________________ Attorney, to
transfer the same on the books of the Company with full power of substitution in
the premises.
Dated: ________________, 19___
___________________________
Signature of Warrant Holder
<PAGE> 1
EXHIBIT (M); PAGE 1
WARRANT NO. E-1029
THIS WARRANT, AND THE COMMON STOCK ISSUABLE UPON ITS EXERCISE, HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN
WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THAT ACT COVERING THIS WARRANT AND/OR THE COMMON STOCK ISSUABLE UPON ITS
EXERCISE, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO HOH WATER
TECHNOLOGY CORPORATION THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
_________________________________
WARRANT TO PURCHASE COMMON STOCK
OF
HOH WATER TECHNOLOGY CORPORATION
_________________________________
This is to Certify that, FOR VALUE RECEIVED, ANTHONY M. FRANK, or
assigns, ("Holder"), is entitled to purchase, subject to the provisions of this
Warrant, from HOH WATER TECHNOLOGY CORPORATION, a California corporation
("Company"), Fifty Thousand (50,000) fully paid, validly issued and
nonassessable shares of Common Stock, $0.01 par value, of the Company ("Common
Stock") at any time or from time to time during the period from the date hereof
until the first to occur to (i) the exercise by HOH of Right provided in and
defined in Section 3(b) of that certain Master Agreement between HOH and
Electropure, Inc., a California corporation, dated July 29, 1992, or (ii) 5:00
P.M. Los Angeles City Time on January 31, 1998 (the "Exercise Period") at an
initial exercise price equal to $0.05 per share. The number of shares of Common
Stock to be received upon the exercise of this Warrant and the price to be paid
for each share of Common Stock may be adjusted from time to time as hereinafter
set forth. The shares of Common Stock deliverable upon such exercise, and as
adjusted from time to time are hereinafter sometimes referred to as "Warrant
Shares" and the exercise price of a share of Common Stock in effect at any time
and as adjusted from time to time is hereinafter sometimes referred to as the
"Exercise Price."
(A) EXERCISE OF WARRANT. This Warrant may be exercised in whole or in
part at any time during the Exercise Period, and during the Exercise Period the
Holder shall have the right to exercise this Warrant into the kind and amount of
shares of stock and other securities and property (including cash) receivable by
a holder of the number of shares of Common Stock into which this Warrant might
have been exercisable immediately prior thereto. This Warrant may be exercised
by presentation and surrender hereof to the Company at its principal office, or
at the office of its stock transfer agent, if any, with the Purchase Form
annexed hereto duly executed and accompanied by payment of the Exercise Price
for the number of Warrant Shares specified in such form. As soon as practicable
after each such exercise of the Warrants, but not later than seven (7) days from
the date of such exercise, the Company shall issue and deliver to the Holder a
certificate or certificates for the Warrant Shares issuable upon such
<PAGE> 1
EXHIBIT (N); PAGE 1
WARRANT NO. E-1030
THIS WARRANT, AND THE COMMON STOCK ISSUABLE UPON ITS EXERCISE, HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN
WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THAT ACT COVERING THIS WARRANT AND/OR THE COMMON STOCK ISSUABLE UPON ITS
EXERCISE, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO HOH WATER
TECHNOLOGY CORPORATION THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
_________________________________
WARRANT TO PURCHASE COMMON STOCK
OF
HOH WATER TECHNOLOGY CORPORATION
_________________________________
This is to Certify that, FOR VALUE RECEIVED, ANTHONY M. FRANK, or
assigns, ("Holder"), is entitled to purchase, subject to the provisions of this
Warrant, from HOH WATER TECHNOLOGY CORPORATION, a California corporation
("Company"), Fifty Thousand (50,000) fully paid, validly issued and
nonassessable shares of Common Stock, $0.01 par value, of the Company ("Common
Stock") at any time or from time to time during the period from the date hereof
until the first to occur to (i) the exercise by HOH of Right provided in and
defined in Section 3(b) of that certain Master Agreement between HOH and
Electropure, Inc., a California corporation, dated July 29, 1992, or (ii) 5:00
P.M. Los Angeles City Time on January 31, 1998 (the "Exercise Period") at an
initial exercise price equal to $0.05 per share. The number of shares of Common
Stock to be received upon the exercise of this Warrant and the price to be paid
for each share of Common Stock may be adjusted from time to time as hereinafter
set forth. The shares of Common Stock deliverable upon such exercise, and as
adjusted from time to time are hereinafter sometimes referred to as "Warrant
Shares" and the exercise price of a share of Common Stock in effect at any time
and as adjusted from time to time is hereinafter sometimes referred to as the
"Exercise Price."
(A) EXERCISE OF WARRANT. This Warrant may be exercised in whole or in
part at any time during the Exercise Period, and during the Exercise Period the
Holder shall have the right to exercise this Warrant into the kind and amount of
shares of stock and other securities and property (including cash) receivable by
a holder of the number of shares of Common Stock into which this Warrant might
have been exercisable immediately prior thereto. This Warrant may be exercised
by presentation and surrender hereof to the Company at its principal office, or
at the office of its stock transfer agent, if any, with the Purchase Form
annexed hereto duly executed and accompanied by payment of the Exercise Price
for the number of Warrant Shares specified in such form. As soon as practicable
after each such exercise of the Warrants, but not later than seven (7) days from
the date of such exercise, the Company shall issue and deliver to the Holder a
certificate or certificates for the Warrant Shares issuable upon such
<PAGE> 1
EXHIBIT (O); PAGE 1
WARRANT NO. E-1034
THIS WARRANT, AND THE COMMON STOCK ISSUABLE UPON ITS EXERCISE, HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN
WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THAT ACT COVERING THIS WARRANT AND/OR THE COMMON STOCK ISSUABLE UPON ITS
EXERCISE, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO HOH WATER
TECHNOLOGY CORPORATION THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
_________________________________
WARRANT TO PURCHASE COMMON STOCK
OF
HOH WATER TECHNOLOGY CORPORATION
_________________________________
This is to Certify that, FOR VALUE RECEIVED, ANTHONY M. FRANK, or
assigns, ("Holder"), is entitled to purchase, subject to the provisions of this
Warrant, from HOH WATER TECHNOLOGY CORPORATION, a California corporation
("Company"), Fourty Thousand (40,000) fully paid, validly issued and
nonassessable shares of Common Stock, $0.01 par value, of the Company ("Common
Stock") at any time or from time to time during the period from the date hereof
until the first to occur to (i) the exercise by HOH of Right provided in and
defined in Section 3(b) of that certain Master Agreement between HOH and
Electropure, Inc., a California corporation, dated July 29, 1992, or (ii) 5:00
P.M. Los Angeles City Time on January 31, 1998 (the "Exercise Period") at an
initial exercise price equal to $0.05 per share. The number of shares of Common
Stock to be received upon the exercise of this Warrant and the price to be paid
for each share of Common Stock may be adjusted from time to time as hereinafter
set forth. The shares of Common Stock deliverable upon such exercise, and as
adjusted from time to time are hereinafter sometimes referred to as "Warrant
Shares" and the exercise price of a share of Common Stock in effect at any time
and as adjusted from time to time is hereinafter sometimes referred to as the
"Exercise Price."
(A) EXERCISE OF WARRANT. This Warrant may be exercised in whole or in
part at any time during the Exercise Period, and during the Exercise Period the
Holder shall have the right to exercise this Warrant into the kind and amount of
shares of stock and other securities and property (including cash) receivable by
a holder of the number of shares of Common Stock into which this Warrant might
have been exercisable immediately prior thereto. This Warrant may be exercised
by presentation and surrender hereof to the Company at its principal office, or
at the office of its stock transfer agent, if any, with the Purchase Form
annexed hereto duly executed and accompanied by payment of the Exercise Price
for the number of Warrant Shares specified in such form. As soon as practicable
after each such exercise of the Warrants, but not later than seven (7) days from
the date of such exercise, the Company shall issue and deliver to the Holder a
certificate or certificates for the Warrant Shares issuable upon such
<PAGE> 1
EXHIBIT (P); PAGE 1
WARRANT NO. 388
THIS WARRANT, AND THE COMMON STOCK ISSUABLE UPON ITS EXERCISE, HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN
WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THAT ACT COVERING THIS WARRANT AND/OR THE COMMON STOCK ISSUABLE UPON ITS
EXERCISE, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO HOH WATER
TECHNOLOGY CORPORATION THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
________________________________
WARRANT TO PURCHASE COMMON STOCK
OF
HOH WATER TECHNOLOGY CORPORATION
________________________________
This is to Certify that, FOR VALUE RECEIVED, ANTHONY M. FRANK, or
assigns, ("Holder"), is entitled to purchase, subject to the provisions of this
Warrant, from HOH WATER TECHNOLOGY CORPORATION, a California corporation
("Company"), Three Hundred Thousand (300,000) fully paid, validly issued and
nonassessable shares of Common Stock, $0.01 par value, of the Company ("Common
Stock") at any time or from time to time during the period from the date hereof,
through and including February 22, 2001, but not later than 5:00 P.M. Los
Angeles City Time on said date (the "Exercise Period") at an initial exercise
price equal to $2.25 per share. The number of shares of Common Stock to be
received upon the exercise of this Warrant and the price to be paid for each
share of Common Stock may be adjusted from time to time as hereinafter set
forth. The shares of Common Stock deliverable upon such exercise, and as
adjusted from time to time are hereinafter sometimes referred to as "Warrant
Shares" and the exercise price of a share of Common Stock in effect at any time
and as adjusted from time to time is hereinafter sometimes referred to as the
"Exercise Price."
(A) EXERCISE OF WARRANT. This Warrant may be exercised in whole or in
part at any time during the Exercise Period, and during the Exercise Period the
Holder shall have the right to exercise this Warrant into the kind and amount of
shares of stock and other securities and property (including cash) receivable by
a holder of the number of shares of Common Stock into which this Warrant might
have been exercisable immediately prior thereto. This Warrant may be exercised
by presentation and surrender hereof to the Company at its principal office, or
at the office of its stock transfer agent, if any, with the Purchase Form
annexed hereto duly executed and accompanied by payment of the Exercise Price
for the number of Warrant Shares specified in such form. As soon as practicable
after each such exercise of the Warrants, but not later than seven (7) days from
the date of such exercise, the Company shall issue and deliver to the Holder a
certificate or certificates for the Warrant Shares issuable upon such
<PAGE> 1
EXHIBIT (Q); PAGE 1
STOCK RIGHT AGREEMENT
NO. E-1034
THIS STOCK RIGHT AGREEMENT (the "Agreement") is made and entered into as
of July 29, 1992, by and between ANTHONY M. FRANK ("Investor") and HOH WATER
TECHNOLOGY CORPORATION, a California Corporation ("HOH"), with respect to the
following factsd:
A. HOH has entered into a Master Agreement dated July 29, 1992 and
Amendments to such Master Agreement, with ELECTROPURE, INC., a California
corporation ("Electropure").
B. Investor is an investor in Electropure.
C. The Master Agreement provides for HOH to enter into this Agreement
with Investor.
NOW, THEREFORE, in consideration of the foregoing facts and the mutual
covenants and agreements contained herein, the parties hereby agree as follows:
1. RIGHT TO PURCHASE SHARES. HOH hereby grants to Investor the right
(the "Preferential Right") to purchase shares of HOH Common Stock or Preferred
Stock (the "Shares") as set forth herein. Investor shall have the Preferential
Right to purchase any Shares HOH offers to any bona fide third party for cash
and/or cancellation of indebtedness, provided, however, Investor shall have the
right and priority to purchase only that percentage of the Shares offered as his
investment in Electropure bears to the total investments in Electropure by all
other investors of Electropure who have entered into substantially similar Stock
Right Agreements and desire to purchase Shares, unless cuh other Investor does
not or cannot purchase his full allocated share of the Shares, in which case,
the balance of the Shares not being purchased shall be allocated again based on
the investments in Electropure. Notwithstanding the above, Investor shall not be
able to purchase Shares under this Agreement with an aggregate Purchase Price
(as defined in Section 2 hereof) of more than Fifty Thousand ($50,000.00)
Dollars.
2. PURCHASE PRICE. The total purchase price per Share shall be
seventy-five percent (75%) of the price the third party investor has agreed in
writing to purchase all the Shares for.
3. MECHANICS. Before HOH can enter into a valid sale or transfer of any
Shares which the Investor has a Preferential Right to purchase herein, HOH shall
first offer such Shares to the Investor and the other investors in Electropure
in the manner set forth below:
3.1. HOH shall deliver written notice to the Investor and the other
investors in Electropure stating the name and address of each prospective bona
fide third party purchasers, the bona fide price, terms and conditions of such
proposed sale or transfer, and written evidence of the intentioned purchasers'
agreement to purchase and ability to purchase such Shares.
3.2. Upon receipt of the notice from HOH, the Investor shall have the
Preferential Right to purchase certain of the Shares specified in the notice by
delivery to HOH, by certified or registered mail or by hand, a written offer to
purchase a specific number of the Shares or the Investors' percentage subject to
the notice, upon the terms enclosed in HOH's notice (subject to the Purchase
Price
<PAGE> 2
EXHIBIT (Q); PAGE 2
set forth in Section 2 hereof). Such offer must be delivered to HOH within
fourteen (14) days after mailing or delivery of the notice to the Investor.
3.3. If the Investor and all other investors in Electropure fail to
agree to purchase ALL Shares set forth in the HOH notice in accordance with the
provisions of this Agreement and substantially similar Stock Right Agreements,
HOH shall at the end of such fourteen (14) day period, inform Investor of the
failure of Investor and the other investors in Electropure to agree to purchase
all the Shares and unless within five (5) days after receipt by Investor of such
second notice, HOH receives the written agreement to purchase ALL Shares in the
first notice from the Investor and/or the other investors in Electropure, ALL
Shares identified in the notice of intention to sell or transfer may be sold or
transferred at any time within ninety (90) days after the date of such first
notice by HOH, and Investor and all other investors in Electropure shall not
have the right to purchase the Shares. If the proposed transferee fails to
purchase such Shares according to these terms, within ninety (90) days after the
date of HOH's first notice, then the Investor must again be given the option to
purchase such Shares in the manner set forth in this Section 3.
4. TRANSFERS AND DELIVERY OF PURCHASE PRICE. The Shares shall be
purchased by Investor within ten (10) days after HOH notifies Investor that
Investor and other investors in Electropure have elected to purchase all the
Shares offered in accordance with the terms, conditions and procedures set forth
herein. By the close of business on such tenth day, HOH shall deliver to
Investor, Stock Certificates for the Shares to be purchased by Investor upon
delivery of the Purchase Price for such Shares being purchased by Investor.
Payment shall be made by Investor by cash or a certified check payable to HOH.
5. REPRESENTATIONS AND WARRANTIES BY HOH.
5.1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of California, has the
corporate power and authority to own or lease its properties and to carry on its
business as now being conducted.
5.2. The Company has the power to enter into this Agreement, and this
Agreement has been duly executed and delivered and constitutes a valid and
binding obligation of the Company.
5.3. The Shares, when issued, will be duly and validly authorized,
fully paid and nonassessable.
6. REPRESENTATIONS AND WARRANTIES OF INVESTOR. Investor represents and
warrants to HOH that:
6.1. The Shares will be acquired by Investor for investment for an
indefinite period, for Investor's own account, not as a nominee or agent, and
not with a view to the sale or distribution of any part thereof, and the
Investor will not have at the time of the purchase of any Shares a then present
intention of selling, granting participation in, or otherwise distributing the
same.
<PAGE> 3
EXHIBIT (Q); PAGE 3
6.2. Investor understands that the Shares will not have been
registered under the Securities Act of 1933, as amended (the "Act"), in reliance
upon the exemptions from the registration provisions of the Act contained in
Section 4(2) thereof.
6.3. At the time of purchase of any of the Shares, Investors will (i)
have adequate means of providing for his current needs and possible personal
contingencies, (ii) have no need for liquidity in the investment in the Shares,
(iii) be able to bear the substantial economic risks of an investment in the
Shares for an indefinite period, (iv) be able to afford a complete loss of such
investment, and (v) will not have an overall commitment to investments which are
not readily marketable that is disproportionate to Investor's net worth, and the
Investor's investment in the Shares will not cause such overall commitment to
become excessive.
6.4. At the time of any purchase of the Shares, Investor will be an
"accredited investor" (as set forth in Regulation D promulgated under the Act)
and the undersigned's total investment in the Shares will not then exceed 10% of
the Investor's net worth or joint net worth with the Investor's spouse.
6.5. Investor understands that the Shares must be held indefinitely
unless the sale or other transfer thereof is subsequently registered under the
Act, or an exemption from such registration is available. Investor further
understands that HOH is under no obligation to register the Shares on his behalf
or to assist him in complying with any exemption from registration except as
otherwise provided herein.
6.6. Investor agrees not to transfer the Shares without registering
them under applicable federal or state securities laws unless the transfer is
exempt from registration. Investor realizes that HOH may not allow a transfer of
Shares unless the transferee is also an "accredited investor". Investor
understands that legends will be placed on certificates representing the Shares,
with respect to the above restrictions on resale or other disposition of the
Shares and that stop transfer instructions have or will be placed with respect
to the Shares so as to restrict the assignment, resale or other disposition
thereof.
6.7. HOH will direct its transfer agent to place such a stop transfer
order in its books respecting transfer of the Shares, and the certificate or
certificates representing the Shares will bear the following legend or a legend
substantially similar thereto:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933. THEY MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF:
(1) AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
THAT ACT, OR (2) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED."
6.8. Investor understands that Rule 144, promulgated by the
Securities and Exchange Commission under the Act, is not currently available for
sale of the Shares, and there is no assurance that it will be available at any
particular time in the future. If and when Rule 144 is available for sale of the
Shares, such sales in reliance upon Rule 144 may only be (i) in limited
quantities after the securities have been held for two years after being sold by
HOH or an affiliate of HOH, or (ii) in unlimited quantities by non-affiliates
after the securities have been held for three years after being sold by HOH or
an affiliate of HOH, in each case in accordance with the conditions of the Rule,
all of which must be met (including the
<PAGE> 4
EXHIBIT (Q); PAGE 4
requirement, if applicable, that adequate information concerning HOH is then
available to the public). HOH has no obligation to supply the information
required for sales under Rule 144.
6.9. Any notice to HOH provided under Section 5 hereof to purchase
any Shares shall contain a current reaffirmation of the representations and
warrants contained in this Section 6 as a condition to the purchase of any
Shares.
7. EXCEPTIONS. The Preferential Right set forth in Section I hereof to
purchase Shares shall not apply to any sale of Shares not solely for cash and/or
cancellation of indebtedness, to any sales to employees of HOH or any
subsidiary, or to any merger, reorganization or acquisition involving HOH or
sale of all or substantially all the assets of HOH.
8. REGISTRATION RIGHTS. The Shares issued pursuant to this Agreement
shall be subject to the same registration rights as provided for the "Warrant
Shares" in Section (i) of the Warrant between the Company and the Investor dated
June _, 1992. For purpose thereof, "Warrant Shares" in the Warrant shall refer
to the Shares and the parties hereto shall have the same rights and duties
regarding the Shares as provided in Section (j) as to the Warrant Shares.
9. ENTIRE AGREEMENT. This Agreement and the Warrant Agreement embodies
the entire agreement and understanding between the parties hereto with respect
to the subject matter hereof and supersedes all prior and contemporaneous
agreements and understandings relating to such subject matter.
10. AMENDMENT. This Agreement may not be amended except by written
document executed by the parties.
11. SUBJECT HEADINGS. Subject headings are included for convenience only
and shall not be deemed part of this Agreement.
12. SEVERABILITY. If any provision of this Agreement shall be held
unenforceable as applied to any circumstance, the remainder of this Agreement
and the application of such provision to other circumstances shall be
interpreted so as best to effect the intent of the parties. The parties further
agree to replace any such unenforceable provision with an enforceable provision
(and to take such other action) which will achieve, to the extent possible, the
purposes of the unenforceable provision.
13. CHOICE OF LAW AND VENUE. This Agreement shall be governed by and
construed under the laws of the State of California in force from time to time.
Any proceeding arising out of this Agreement shall be brought in orange County,
California.
14. ATTORNEYS' FEES. In any action to enforce this Agreement, the
prevailing party shall be entitled to recover from the non-prevailing party all
reasonable costs, including, without limitation, attorneys' fees.
15. ADDITIONAL DOCUMENTS. The parties agree to execute such additional
documents and perform such other acts as may be necessary or appropriate to
achieve the purposes of this Agreement.
<PAGE> 5
EXHIBIT (Q); PAGE 5
16. NON-WAIVER. No waiver by a party of any failure by the other party
to keep any provision of this Agreement shall be deemed a waiver of any
preceding or succeeding breach of the same or any other provision.
17. PARTIES BOUND. This Agreement is binding on and shall inure to the
benefit of the parties and their respective successors, assigns, heirs, and
legal representatives.
18. NUMBER AND GENDER. Wherever required by the context hereof, the
singular shall include the plural and vice versa, and the neuter gender shall
include the masculine and feminine genders, and vice versa; the word "person"
shall include a natural person and a corporation, partnership, firm or other
form of association; the word "or" is not exclusive; and the words "herein,"
"hereof" and "hereunder" refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context expressly requires
otherwise.
19. EXPENSES. HOH and Investor shall each be responsibl e for the
payment of their own expenses incurred in connection with this Agreement and the
transactions contemplated hereunder.
20. JOINT PREPARATION. This Agreement shall be interpreted as if
prepared jointly by the parties.
21. SURVIVAL. The representations, warranties, covenants, and agreements
contained in this Agreement shall survive the consummation of the transactions
contemplated hereby.
22. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
HOH: HOH WATER TECHNOLOGY CORPORATION
By: /s/ CATHERINE PATTERSON
---------------------------
Catherine Patterson
Chief Financial Officer
Address:
P.O. Box 3613
Laguna Hills, California 92654-3613
Investor: /s/ ANTHONY M. FRANK
----------------------
Anthony M. Frank
Address:
320 Meadowood Court
Pleasant Hill, CA 94523-3176
###-##-####
<PAGE> 1
EXHIBIT (R); PAGE 1
10% TWO-YEAR CONVERTIBLE TERM NOTE
$50,000 DECEMBER 31, 1996
EDI COMPONENTS, a California corporation formerly known as Electropure,
Inc., (the "COMPANY"), for the value received, hereby unconditionally and
absolutely promises to pay to the order of ANTHONY M. FRANK IRA ROLLOVER DATED
06/24/92, UTA CHARLES SCHWAB & COMPANY, INC., or holder (collectively, the
"HOLDER"), upon presentation and surrender of this Note at its office at 23251
Vista Grande, Suite A, Laguna Hills, California 92653, or such other place as
the Company may, from time to time, designate, the sum of FIFTY THOUSAND DOLLARS
($50,000), in lawful money of the United States, on December 31, 1998, or if
such day is not a regular business day, then on the next business day thereafter
(the "Maturity Date"). Accrued interest shall be paid annually in accordance
with the terms set forth in Section 2 hereof.
1. CONVERSION.
(a) The Holder of this Note shall have the right, at its option, at any
time up until 5:00 P.M. Los Angeles time on the fifth (5th) day immediately
before January 31, 1998 (except that, with respect to any portion of this Note
which shall be called for prepayment, such right shall as to such portion
terminate at 5:00 P.M. Los Angeles time on the fifth (5th) day immediately prior
to the Prepayment Date (as defined in Section 2 hereof)), to convert all or any
portion of the principal amount of this Note, including interest accrued
thereon, subject to the terms and provisions of this Section 1, into Class A
Common Stock of EDI Components (the "Conversion Shares") at and having a value
equal to Two Dollars ($2.00) per share (the "Conversion Price").
The Conversion Shares shall have the rights, preferences and privileges
set forth in APPENDIX ONE hereto.
(b) As promptly as practicable after the surrender, as herein provided,
of this Note for conversion, the Company shall deliver or cause to be delivered,
to or upon the written order of the Holder of this Note so surrendered,
certificates representing the number of full shares into which this Note or any
portion thereof may be converted in accordance with the provisions of this
Section 1, together with any check in payment for fractional shares. Such
conversion shall be deemed to have been made at the close of business on the
date that this Note shall have been received by the Company for conversion, with
a written Notice of Conversion duly executed, in satisfactory form for
conversion, so that the rights of the Holder of this Note as a Noteholder, to
the extent of that portion of the Note so
<PAGE> 2
EXHIBIT (R); PAGE 2
converted, shall cease at such time and, subject to the following provisions of
this Section 1(b). If this Note shall be converted in part only, the Company.
shall, upon surrender of this Note for cancellation, execute and deliver a new
Note evidencing the rights of the Holder thereof with regard to that portion of
the Note not converted. The person or persons entitled to receive the Conversion
Shares of Common Stock upon conversion of this Note shall be treated for all
purposes as having become the record holder or holders of such Shares of Common
Stock at such time and such conversion shall be at the Conversion Price in
effect at such time; provided, however, that no such surrender upon voluntary
conversion on any date when the stock transfer books of the Company shall be
closed shall be effective to constitute the person or persons entitled to
receive the Shares of Common Stock upon such conversion as the record holder or
holders of such Shares of Common Stock on such date, but such surrender shall be
effective to constitute the person or persons entitled to receive such Shares of
Common Stock as the record holder or holders thereof for all purposes at the
close of business on the next succeeding day on which such stock transfer books
are open; and such conversion shall be at the Conversion Price in effect on the
date that this Note shall have been surrendered for conversion in satisfactory
form for conversion, as if the stock transfer books of the Company had not be
closed.
(c) No adjustment in respect of declared but unpaid cash dividends on
the Common Stock shall be made upon the conversion of this Note.
2. PAYMENTS AND PREPAYMENTS.
(a) All payment and prepayments of principal and interest shall be
made in immediately available funds to the Holder at its office at 101
Montgomery, 18th Floor, San Francisco, California 94104.
(b) The unpaid principal amount of the Note from time to time
outstanding shall bear interest from the date of this Note at the rate of Ten
Percent (10%) per annum until paid. Accrued interest shall be paid on the last
day of February each year, beginning on March 31, 1998. Interest shall be
computed for the actual number of days elapsed on the basis of a year consisting
of 360 days.
(c) The Company may prepay at any time all or any part of this Note
by notifying the Holder in writing at least fifteen (15) days in advance of the
proposed date for prepayment (the "Repayment Date"). The notice shall state:
(1) the Repayment Date;
(2) that the portion of the Note to be repaid may be converted at
any time before 5:00 P.M. Los Angeles time on the fifth (5th) day immediately
prior to the Repayment Date;
<PAGE> 3
EXHIBIT (R); PAGE 3
(3) that Holders who want to convert any portion of this Note
must satisfy the requirements of Section (1) hereof;
(4) the Note called for repayment must be surrendered to the
Company to collect the amount being prepaid, and if less than the entire
principal amount is being repaid, to receive a new Note for the remaining
balance; and
(5) that interest on the portion of the Note called for repayment
ceases to accrue on and after the Repayment Date.
(d) Once notice of prepayment is mailed, the part of this Note called
for prepayment, unless converted, becomes due and payable on the Repayment Date.
Upon surrender to the Company, such part of this Note shall be paid at the
Repayment Date, plus accrued interest on the portion of the principal being
prepaid to the Prepayment Date.
(e) Upon surrender of this Note to be prepaid in part, the Company
shall issue to the Holder a new Note equal in principal amount to the nonprepaid
portion of this Note surrendered.
3. NOTICES TO NOTEHOLDER.
So long as this Note shall be outstanding, if the Company (i) shall pay
any dividend or make any distribution upon the Company Stock or (ii) shall offer
to the holders of Common Stock for subscription or purchase by them any share of
any class or any other rights or (iii) shall effect a capital reorganization,
reclassification of capital stock, consolidation or merger with or into another
corporation, sale, lease or transfer of all or substantially all of the property
and assets of the Company to another corporation, or voluntary or involuntary
dissolution, liquidation or winding up of the Company, then in any such case,
the Company shall cause to be mailed by certified mail to the Holder, at least
fifteen days prior to the date specified in (x) or (y) below, as the case may
be, a notice containing a brief description of the proposed action and stating
the date on which (x) a record is to be taken for the purpose of such dividend,
distribution or rights, or (y) such reclassification, reorganization,
consolidation, merger, conveyance, lease, dissolution, liquidation or winding up
is to take place and the date, if any is to be fixed, as of which the holders of
Common Stock or other securities shall receive cash or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up.
4. RECLASSIFICATION, REORGANIZATION OR MERGER.
In case of any reclassification, capital reorganization or other change
of outstanding shares of Common Stock of the Company, or in case of any
consolidation or merger of the Company with or
<PAGE> 4
EXHIBIT (R); PAGE 4
into another corporation (other than a merger with a subsidiary in which merger
the Company is the continuing corporation and which does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the class issuable upon conversion of this Note) or in case
of any sale, lease or conveyance to another corporation of the property of the
Company as an entirety, the Company shall, as a condition precedent to such
transaction, cause effective provisions to be made so that the Holder shall have
the right thereafter by converting this Note at any time prior to the payment in
full or conversion of the Note, whichever shall first occur, to acquire the kind
and amount of shares of stock and other securities and property receivable upon
such reclassification, capital reorganization and other change, consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
which might have been acquired upon conversion of this Note immediately prior to
such reclassification, change, consolidation, merger, sale or conveyance. Any
such provisions shall include provisions for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Note. The foregoing provisions of this Section 4 shall similarly apply to
successive reclassifications, capital reorganizations and changes of shares of
Common Stock and to successive consolidations, mergers, sales or conveyances.
5. REGISTRATION UNDER THE SECURITIES ACT OF 1933.
Holder recognizes and acknowledges that the Securities (as defined
below) of the Company, if and when issued, have not been registered under the
Federal Securities Act of 1933, as amended, in reliance upon the private
placement exemption set forth in Section 4(2) thereunder, and have not been
registered under the California Corporate Securities Law of 1968, as amended, in
reliance upon the private placement exemption set forth in Section 25102(f)
thereunder. The Holder, being fully aware of the exemptions under which the
Securities were sold, understands that his ability to sell, pledge, hypothecate
or otherwise dispose of the Securities may be restricted and that the Holder may
not sell, pledge, hypothecate or otherwise dispose of the Securities, except in
compliance with the Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended, the California Corporate Securities Law of 1968, as
amended, or any other applicable securities law or applicable exemptions
thereunder. Accordingly, the sale, pledge, hypothecation or other disposition of
the Securities, or of any portion thereof, may not be accomplished except
pursuant to an opinion of legal counsel acceptable to the Company.
<PAGE> 5
EXHIBIT (R); PAGE 5
6. INVESTMENT.
(a) By acceptance of this Note, the Holder agrees that this Note and the
Conversion Shares (collectively, the "Securities") are acquired for the purpose
of investment and not with a present view to the sale or distribution thereof
and that, with respect to the Securities the Holder agrees to the following
representations and covenants:
(1) The Securities are being acquired for the purpose of investment
and not with a present view to the sale or distribution thereof.
(2) The recipient is familiar with the affairs and financial
condition of the Company and is financially capable of holding this Note for
investment.
(3) No sale, transfer, assignment, hypothecation or other disposition
of the Securities will be made except (i) in a transaction in compliance with
the registration requirements of the Act, or (ii) in a transaction pursuant to
an exemption from the registration requirements of the Act, or (iii) in a
transaction or under circumstances to which the registration requirements of the
Act are not applicable.
(b) The Securities and all agreements or certificates with respect to
any Securities shall be subject to the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 ("ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. FURTHER, THE
SHARES ARE SUBJECT TO AN OPTION BY THE COMPANY."
7. RIGHT OF FIRST REFUSAL.
If Holder proposes to engage in a bona fide Sale of any of the
Conversion Shares, directly or indirectly, to an unaffiliated, bona fide third
party, then prior to taking any such action, the Holder shall deliver to the
Company a statement in writing (the "Statement") setting forth (i) the date of
the Statement (the "Statement Date"); (ii) the manner in which the Sale is
proposed to occur; (iii) the consideration for the Sale; (iv) the purchaser's
name, address and telephone number; (v) the purchaser's willingness to supply
any additional information about himself or itself as may be reasonably
requested by the Company; and (vi) a copy of the related legally binding offer
(the "Offer") of purchase. The Company shall
<PAGE> 6
EXHIBIT (R); PAGE 6
thereupon have the irrevocable and exclusive option, but not the obligation (the
"Option"), to purchase all of the Conversion Shares subject to the Option upon
the same terms and conditions set forth in the Statement. The Option shall be
exercised by the Company by giving notice (the "Option Notice") to the Holder,
within 15 days following the date of the Statement, that the Company elects to
exercise the Option. Upon exercise of the Option, the Holder shall have the
obligation to consummate the Sale or and subject to the terms and conditions set
forth in the Statement. Failure by the Company to exercise the Option to give an
Option Notice shall be deemed an election by it not to exercise the Option. A
Sale shall mean any sale of the Conversion Shares.
8. EVENTS OF DEFAULT. If one or more of the following described events
shall occur (each an "Event of Default"):
(a) The Company shall fail to pay the principal of, or interest on,
this Note within five (5) days after the Holder has given written notice to the
Company that the same has become due; or
(b) The Company shall fail to perform or observe any of the
provisions contained in any Section of this Note and such failure shall continue
for more than thirty (30) days after the Holder has given written notice to the
Company; or
(c) Any material representation or warranty made in writing by or on
behalf of the Company in this Note shall prove to have been false or incorrect
in any material respect, or omits to state a material fact required to be stated
therein in order to make the statements contained therein, in the light of the
circumstances under which made, not misleading, on the date as of which made,
and the Company shall have failed to cure such false or incorrect statement
within thirty (30) days after the Holder has given written notice to Borrower;
or
(d) The Company shall be adjudicated a bankrupt or insolvent, or
admit in writing its inability to pay its debts as they mature, or make an
assignment for the benefit of creditors; or the Company shall apply for or
consent to the appointment of a receiver, trustee, or similar officer for it or
for all or any substantial part of its property; or such receiver, trustee or
similar officer shall be appointed without the application or consent of the
Company and such appointment shall continue undischarged for a period of thirty
(30) days; or the Company shall institute (by petition, application, answer,
consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation or similar proceeding relating to
it under the laws of any jurisdiction; or any such proceeding shall be
instituted (by petition, application or otherwise) against the Company and shall
remain undismissed for a period of ninety (90) days; or any judgment, writ,
warrant of attachment or execution
<PAGE> 7
EXHIBIT (R); PAGE 7
or similar process shall be issued or levied against a substantial part of the
property of the Company and such judgment, writ, or similar process shall not be
released, vacated or fully bonded within ninety (90) days after its issue or
levy; or
(e) The Company shall be enjoined, restrained or in any way prevented
by a court order from continuing to conduct all or any material part of its
business affairs;
(f) Any suit, action or other proceeding (judicial or administrative)
commenced against the Company, or with respect to any assets of the Company,
shall threaten to have a material adverse effect on their future operations,
including, without limitation a final judgment or settlement in excess of
$25,000 in excess of insurance shall be entered in, or agreed to in respect of
any such suit, action or proceeding.
THEN, or at any time thereafter, and in each and every case:
(1) Where the Company is in default under the provisions of Section 8(d)
hereof, the entire unpaid principal amount of the Note, all interest accrued and
unpaid thereon, and all other amounts payable to the Holder hereunder shall
automatically become and be forthwith due and payable without offset or
counterclaim of any kind and without presentment, demand, protest or notice of
any kind, and without regard to the running of the statute of limitations, all
of which are hereby expressly waived by the Company; and
(2) In any other case referred to in this Section 8, the Holder may, by
written notice to the Company, as the case may be, declare the entire unpaid
principal amount of this Note, all interest accrued and unpaid hereon, and all
other amounts payable hereunder to be forthwith due and payable, whereupon the
same shall become immediately due and payable, without offset or counterclaim of
any kind and without presentment, demand, or protest, and without regard to the
running of any statutes of limitation, all of which are hereby expressly waived
by the Company.
Any declaration made pursuant to Section 8(2) hereof is subject to the
condition that, if at any time after the principal of this Note shall have
become due and payable, and before any judgment or decree for the payment of the
moneys so due, or any thereof, shall have been entered, all arrears of principal
and interest upon this Note (except that principal of this Note which by such
declaration shall have become payable) shall have been duly paid, and every
Event of Default shall have been made good, waived or cured, then and in every
such case the Holder shall be deemed to have rescinded and annulled such
declaration and its consequences; but no such rescission or annulment shall
extend to or affect any subsequent Event of Default or impair any right
consequent thereon.
<PAGE> 8
EXHIBIT (R); PAGE 8
9. CORPORATE OBLIGATION. It is expressly understood that this Note is
solely a corporate obligation of the Company and that any and all personal
liability, either at common law or in equity, or by constitution or statute, of,
and any and all rights and claims against, every stockholder, officer, or
director, as such, past, present or future, are expressly waived and released by
the Holder as a part of the consideration for the issuance hereof.
10. AUTHORIZATION; NO CONFLICT. The borrowings hereunder, the execution
and delivery of the Note and the performance by the Company of its obligations
under this Agreement and the Note are within the corporate powers of the
Company, have been authorized by all necessary corporate action, have received
all necessary governmental approval (if any shall be required) and do not and
will not contravene or conflict with any provision of law or of the charter or
by-laws of the Company or of any agreement binding upon the Company.
11. TRANSFER. Subject to the appropriate provisions of the Act and of
Section 7 hereof, this Note or any portion of the principal amount hereof in
$50,000 increments thereof (or any remaining balance if any pre-payments have
occurred pursuant to Section 2 hereof) is transferable on the records of the
Company upon presentation of this Note, properly endorsed, at its principal
office; upon such presentation and transfer a new Note or Notes will be issued.
For the purposes of payment and all other purposes, the Company shall deem and
treat the person in whose name this Note is registered as the absolute owner
hereof and the Company shall not be affected by any notice to the contrary.
12. MISCELLANEOUS.
(a) Notwithstanding the foregoing, the Company promises to pay
interest after maturity (whether by acceleration or otherwise, and before as
well as after judgment) at the same rate as above provided prior to maturity on
balances, if any, then outstanding.
(b) Interest under this Note shall be computed on the basis of a
thirty (30) day month and a year of 360 days for the actual number of days
elapsed.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
in Laguna Hills, California as of the day and year first above written.
EDI COMPONENTS HOLDER:
ANTHONY M. FRANK IRA ROLLOVER DATED
06/24/92, UTA CHARLES SCHWAB & CO., INC.
By /s/ FLOYD PANNING By /s/ ANTHONY M. FRANK
---------------------------- ------------------------------------
Floyd Panning, President Anthony M. Frank
<PAGE> 9
EXHIBIT (R); PAGE 9
APPENDIX ONE
EDI COMPONENTS
(FORMERLY, ELECTROPURE, INC.)
COMMON STOCK
RIGHTS, PREFERENCES AND PRIVILEGES
Holders of Common Stock are entitled to one vote per share on all matters to be
voted upon by the shareholders and except as may otherwise be required by law
will vote with the holders of the Class B Common Stock (which are entitled to
six votes per share) as one class. Under California law, separate class voting
is required for mergers or sales of substantially all the Company's assets. If,
prior to the election of directors, any shareholder has given notice that he
intends to cumulate his votes, then for the election of directors each
shareholder may cumulate votes for any nominee, if the nominee's name was placed
in nomination prior to the voting. In cumulative voting, each shareholder is
entitled in the election of directors to vote one vote for each vote held by
him, multiplied by the number of directors to be elected and may cast all such
votes for a single nominee for director or may distribute them among any two or
more nominees as he sees fit.
The shares of Common Stock have no preemptive, subscription, conversion or
redemption rights. Upon liquidation, dissolution or winding up of the Company,
the holders of Common Stock are entitled to receive pro rata the assets of the
Company which are legally available for distribution to shareholders, subject to
the liquidation rights held by the Class B Common Stock, and prior rights, if
any, which may be established in the future for the Preferred Stock. Holders of
Common Stock are entitled to dividends when, as and if declared by the Board of
Directors out of funds legally available therefor along with the holders of the
Class B Common Stock, subject to any prior rights which may be granted in the
future to holders of Preferred Stock.
Upon issuance of the Common Stock, Holder shall be entitled to:
A. The right to payment in the sum of $66,667 in the event Electropure,
Inc. (formerly HOH Water Technology Corporation) shall exercise its right to
terminate the Exclusive License Agreement dated July 29, 1992 between
Electropure, Inc. and EDI Components;
B. The right to 17,925 Warrants to purchase Class A Common Stock of
Electropure, Inc. at the rate of $0.50 per share. Such Warrants will be
exercisable, at the discretion of Holder, at any time prior to January 31, 1998;
C. The right, until January 31, 1998, to purchase $50,000 in shares of
Common Stock or Preferred Stock of Electropure, Inc. at 75% of the purchase
price at which any bona fide third party purchaser has agreed in writing to
purchase any such shares offered by Electropure, Inc; and
D. A $50,000 security interest in the EDI patents held by Electropure,
Inc.
<PAGE> 1
EXHIBIT (S); PAGE 1
10% TWO-YEAR CONVERTIBLE TERM NOTE
$50,000 FEBRUARY 25, 1997
EDI COMPONENTS, a California corporation formerly known as Electropure,
Inc., (the "COMPANY"), for the value received, hereby unconditionally and
absolutely promises to pay to the order of ANTHONY M. FRANK IRA ROLLOVER DATED
06/24/92, UTA CHARLES SCHWAB & COMPANY, INC., or holder (collectively, the
"HOLDER"), upon presentation and surrender of this Note at its office at 23251
Vista Grande, Suite A, Laguna Hills, California 92653, or such other place as
the Company may, from time to time, designate, the sum of FIFTY THOUSAND DOLLARS
($50,000), in lawful money of the United States, on February 25, 1999, or if
such day is not a regular business day, then on the next business day thereafter
(the "Maturity Date"). Accrued interest shall be paid annually in accordance
with the terms set forth in Section 2 hereof.
1. CONVERSION.
(a) The Holder of this Note shall have the right, at its option, at any
time up until 5:00 P.M. Los Angeles time on the fifth (5th) day immediately
before January 31, 1998 (except that, with respect to any portion of this Note
which shall be called for prepayment, such right shall as to such portion
terminate at 5:00 P.M. Los Angeles time on the fifth (5th) day immediately prior
to the Prepayment Date (as defined in Section 2 hereof)), to convert all or any
portion of the principal amount of this Note, including interest accrued
thereon, subject to the terms and provisions of this Section 1, into Class A
Common Stock of EDI Components (the "Conversion Shares") at and having a value
equal to Two Dollars ($2.00) per share (the "Conversion Price").
The Conversion Shares shall have the rights, preferences and privileges
set forth in APPENDIX ONE hereto.
(b) As promptly as practicable after the surrender, as herein provided,
of this Note for conversion, the Company shall deliver or cause to be delivered,
to or upon the written order of the Holder of this Note so surrendered,
certificates representing the number of full shares into which this Note or any
portion thereof may be converted in accordance with the provisions of this
Section 1, together with any check in payment for fractional shares. Such
conversion shall be deemed to have been made at the close of business on the
date that this Note shall have been received by the Company for conversion, with
a written Notice of Conversion duly executed, in satisfactory form for
conversion, so that the rights of the Holder of this Note as a Noteholder, to
the extent of that portion of the Note so
<PAGE> 1
EXHIBIT (T); PAGE 1
10% TWO-YEAR CONVERTIBLE TERM NOTE
$50,000 APRIL 10, 1997
EDI COMPONENTS, a California corporation formerly known as Electropure,
Inc., (the "COMPANY"), for the value received, hereby unconditionally and
absolutely promises to pay to the order of ANTHONY M. FRANK IRA ROLLOVER DATED
06/24/92, UTA CHARLES SCHWAB & COMPANY, INC., or holder (collectively, the
"HOLDER"), upon presentation and surrender of this Note at its office at 23251
Vista Grande, Suite A, Laguna Hills, California 92653, or such other place as
the Company may, from time to time, designate, the sum of FIFTY THOUSAND DOLLARS
($50,000), in lawful money of the United States, on [OBJECT OMITTED]1999, or if
such day is not a regular business day, then on the next business day thereafter
(the "Maturity Date"). Accrued interest shall be paid annually in accordance
with the terms set forth in Section 2 hereof.
1. CONVERSION.
(a) The Holder of this Note shall have the right, at its option, at any
time up until 5:00 P.M. Los Angeles time on the fifth (5th) day immediately
before January 31, 1998 (except that, with respect to any portion of this Note
which shall be called for prepayment, such right shall as to such portion
terminate at 5:00 P.M. Los Angeles time on the fifth (5th) day immediately prior
to the Prepayment Date (as defined in Section 2 hereof)), to convert all or any
portion of the principal amount of this Note, including interest accrued
thereon, subject to the terms and provisions of this Section 1, into Class A
Common Stock of EDI Components (the "Conversion Shares") at and having a value
equal to Two Dollars ($2.00) per share (the "Conversion Price").
The Conversion Shares shall have the rights, preferences and privileges
set forth in APPENDIX ONE hereto.
(b) As promptly as practicable after the surrender, as herein provided,
of this Note for conversion, the Company shall deliver or cause to be delivered,
to or upon the written order of the Holder of this Note so surrendered,
certificates representing the number of full shares into which this Note or any
portion thereof may be converted in accordance with the provisions of this
Section 1, together with any check in payment for fractional shares. Such
conversion shall be deemed to have been made at the close of business on the
date that this Note shall have been received by the Company for conversion, with
a written Notice of Conversion duly executed, in satisfactory form for
conversion, so that the rights of the Holder of this Note as a Noteholder, to
the extent of that portion of the Note so
